An extended U.S. federal shutdown is a nervous prospect for Niagara exporters.

But it’s also something that should worry everyone, says Leigh Coulter, president of GGS Structures Inc.

“All of Canada should be concerned,” said Coulter, whose Vineland Station firm employs about 50 people, and makes greenhouses and fabric covered buildings. The U.S. is the company’s biggest export market, accounting for about 20% of shipments.

“The U.S. is also our country’s largest training partner,” said Coulter. “So anything that could potentially affect that (is troubling).”

Hundreds of thousands of non-essential U.S. government workers have been unpaid leave since Tuesday, affecting everything from national parks to federal offices and the provision of loans.

While operations like the border and airports are functioning becuase they’re considered essential, the possibility of future slowdowns at the border remains, as does the potential for the U.S. economy to sag as a result.

Coulter said GGS trucks have had no trouble crossing the border this week.

“It is business as usual, but how long that continues to happen is definitely a concern,” she said.

Also troubling is the impact on GGS’s greenhouse customers, who could be affected by border or economic fallout from the federal shutdown.

“A lot of them ship into the U.S. substantially, so not only would a border problem hurt my exports, but if it hurts my Niagara customers ... that’s going to hurt me as well.

“There really is a ripple effect, so we’re watching it pretty tightly.”

Walter Sendzik, CEO of the Greater Niagara Chamber of Commerce said the longer the U.S. shutdown continues, the more upheaval it creates for the business sector.

“It’s more about the drag on the economy,” Sendzik said. “It creates an uncertainty for business between Canada and the U.S.”

“The longer it lasts, the greater the likelihood there could be more obstacles that hinder business transactions,” he said.

“And as the American economy goes, so does the Canadian economy.”

Anna Pierce, chair of the Niagara Falls Chamber of Commerce, said her chamber and its members are watching the situation closely.

“If it continues for a long period of time, I’m sure that we will see the ramifications in all sectors,” said Pierce.

She points, as examples, to export and import-affected businesses and food-and-pharmaceutical concerns as being affected if the situation continues.

“We’re hoping (U.S. lawmakers) settle this and get to the table and work this out fairly quickly.”

If American lawmakers don’t raise the limit on federal borrowing by Oct. 17, it could default on its financial obligations.

That could lead to a financial crisis at least matching the banking meltdown and recession of 2008.

That scenario moves into frightening uncharted waters, says Blayne Haggart, an assistant professor in political science at Brock University.

“Nobody knows what’s going to happen as it’s never happened before,” he said. In 2008, the financial markets seized up and only a concerted international effort averted disaster.

“There’s at least a possibility ... a crisis of a similar magnitude would happen if the debt ceiling were not to be renewed or increased,” Haggart said.

“If the US ends up defaulting on its debt ... it basically has the potential to call into question the foundations of the global financial system,” said Haggart, whose specialty is North American politics and economy.

He said the U.S. has essentially guaranteed the stability of the global financial system since the end of the Second World War.

The result of a default could be a potential devastating impact to the world’s financial state, which is indelibly linked to America’s.

“We’re in a global financial system,” he said. “The U.S. financial system (and U.S. government debt) is at the heart of this.

“Anything that affects that will have ramifications around the world.”

Poll

Are you concerned about the effects of the US federal shutdown and its debt ceiling?

Sunday, February 18, 2018

Yes, it could cause another big recession

No, some sense will prevail and American lawmakers will find a way out of it